UK economic secretary rejects proposal to regulate crypto as gambling
A Treasury Committee report had concluded that crypto assets “more closely resemble gambling than a financial service”.
UK.- Andrew Griffith, economic secretary to the UK treasury, says he “firmly” disagrees with the UK Parliament’s Treasury Committee’s proposal that unbacked crypto assets be considered a form of gambling for regulatory purposes. He said such a move would go against recommendations from “international organisations and standard-setting bodies”.
A report from the House of Commons Treasury Committee has concluded that “Unbacked cryptoassets have no intrinsic value, and their price volatility exposes consumers to the potential for substantial gains or losses, while serving no useful social purpose“. It said that such traits “more closely resemble gambling than a financial service, an impression reinforced by the evidence we have received of consumer behaviour”.
Griffith said he recognised risks mentioned in the report and an urgent need for regulation but said he disagreed with the approach recommended by the committee, warning that it could create a misalignment with international standards. He cited the recommendations of International Organization of Securities Commissions and the G20 Financial Stability Board.
He argued that regulating crypto as gambling would risk blurring the boundaries between the roles of financial and gambling regulators without addressing the unique risks of crypto trading, such as market manipulation and credit practices. He also noted that the Gambling Commission does not have the expertise to deal with the sector.
As such, Griffith says the government is of the opinion that the crypto sector would be better regulated within financial services.
He said: “The Gambling Commission has a strong track record of safeguarding consumers and the wider public by ensuring gambling is safe and fair. However, overseeing financial risks, which are akin to those which exist within financial markets, is not within the mandate or field of expertise of the Gambling Commission.”
The UK government published a consultation paper in February proposing to work with digital asset firms to develop a regulatory framework. Meanwhile, the UK Financial Conduct Authority (FCA) has announced new rules for the marketing of crypto assets. From October 8, firms must give first-time investors a mandatory 24-hour cooling-off period, during which they may reconsider their investment.
Griffith concluded: “I look forward to continuing to work with the committee as we deliver on our ambition to make the UK a leading jurisdiction for crypto asset technology and investment, underpinned by clear and robust regulation.”
